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On the 21st of March 2018, we released a teaser article entitled, “The worse of DKM, Capital Bank and UT Bank is yet to happen in Ghana. It would be more disastrous without Remedy and am certainly referring to the investment Banking Industry in Ghana” This was a wakeup call to the people of Ghana and the regulatory agencies, unfortunately we (The Truth) were rather faced with threats and insults to the extent of being branded as the prophets of doom. As it stands today, it has happen and every Ghanaian would certainly have their pound of flesh in this financial crises. Per the culture and the style or fabric of inter woven family system practiced exposes all members in the event where one member or the bread winner is affected the whole family suffers the same fate.
The economy of Ghana may suffer a total loss of Funds by its citizens to the tune of over thirty seven Billion Ghana cedi’s as a result of negligence and unconcern by the regulators and greed by prospective investors. Over the past 10 to 15 years, some industry regulators have displayed gross negligence and unfair stands over the institutions they are to regulate or call to order and in other scenarios, beat-up to fall in line to the orders of the law.
In our recent publications titled “open letter to securities and exchange commission (sec) as a concern citizen advocator” we did indicate clearly that about 95% of the Licensed Fund Managers cannot pay back the Fixed Term Deposits (fixed Deposit) funds they mobilized from the public even if given up to the year 2028 grace period to do so. We equally explained to Ghanaians the definition of Licensed fund managers and what they were licensed to do as well as the illegalities they have indulged in (For recap, you can check Ghananewsonline.com.gh or page 9 of 25th September, 2018 Publications of the Daily searchlight newspaper) and also gave reasons and some activities they were engaged in which has led them to this point. Recommendations and suggestions were also part of the letter sent to SEC and copy to BoG.
In other not to burden you so much with stories, we would like to go straight to the point. It involves a little bit of complex calculations and analysis but we would try as much as possible to simplify things to the understanding of the mass majority.
Under the Securities and Exchange Commission, The 148 licensed Fund Managers which we know not to be deposit taking institutions and as such cannot engage the public in the trade of Fixed Deposit has already mobilized in Net of over Twenty Two Billion Ghana Cedi’s (GHC22 Billion) equivalent of $4.4 Billion using the Cedi to Dollar rate of 5:1. We equally did explain why these Mobilized funds cannot be paid back to their respective customers or Depositors even upon the directives of the SEC to the fund managers to return such funds to its respective owners upon maturity with deadline being the end of December 2018. This represents about 8 Million clients or depositors which includes all categories of people as well as Rural banks, Credit unions, Susu Collectors, Schools, Churches, Associations just to mention the list.
The ripple effect is this, These Rural banks, Credit Unions, Schools, Churches, Associations and the Susu Collectors are also just custodians of people’s funds which they have given to some of these fund managers in the name of Fixed Deposit. Their inability to honor the request of their clients due to funds being locked up by these fund managers would also add up to the number of people who might be losing their funds if care is not taken.
Under the current circumstances, should it stand that MenzGold and the other shadow or online investments firms is allegedly trading or dealing in illegalities or running a Ponzi scheme as stated by SEC then we are looking at another loss of about Fifteen Billion Ghana Cedi’s (GHC15 Billion) equivalent to about $3 Billion of its victims funds. This on the average represent about 53,000 clients of Ghanaian investors who might be losing their money here
In total we are looking at about 8.4 million Ghanaian who would be losing their money without any refund from and regulatory institutions because;
Neither of the Fund Managers and the other alleged unlicensed deposit taking institutions have any capital reserve with any state agency or regulator.
They were not mandated by any state institution or any regulator to undertake such business or trade that they did engaged the public in.eg Fund Managers not licensed to be fixed deposit mobilizers from the public
Their respective liability ends with this Company’s as a person or an entity and not on any other entity of the shareholders nor their personal assets unless the Courts chooses to pierce the corporate veil.
For over 8 million Ghanaians Financial investors to loss a whooping sum of GHC37 Billion ($7.4 Billion) is really a disaster. The effect and its impact would be felt across every region and districts and towns of Ghana due to the evenly spread of these institutions.eg Fund Managers are in every region and the busy commercial enclaves of this country.
Currently the Central bank of Ghana has already committed about GHC8 Billion into the salvaging the remains of the defunct UT & Capital Bank and the consolidated banks. This GHC8 Billion is the tax payer’s money.
Our research has also proven that about 5 Banks may not be able to meet the capital requirement nor the deadline given by the Central Bank BoG and as such may be consolidated or liquidated and recapitalized by the central bank before handing it over to a takeover bank. This would certainly cost the state another Billions of the Ghanaian Cedi’s which is the poor tax payers money. (Yet the tax payer cannot boast of good roads, proper hospitals and affordable health care facilities talk less of proper quality education for their wards.—- Hmmmm What a country)
There has also been a monster in the banking industry known as NPL (None Performing Loans) which has accumulated debts on its books to about GHC7 Billion in total. This figures and information’s should tell you that BoG in connection with Ministry of Finance would be spending about GHC16 Billion Cedi’s of the tax payers money into the banking industry before the banks or the industry can be classified as a sanitized institution.
So, the bigger question is this even if out of political campaign promises or vote buying gamic where some government or political figure through an institution promises the over 8 to 9 million customers who would be losing their money a refund of their un-existing investment, where would such funds come from. Let us not lose sight of the facts that DKM and God is Love clients are still chasing up for their promised money. Surprisingly they were licensed deposit taking institution under BoG and yet still, how much less this Fund managers who were not licensed to be Deposit Taking Institution and were equally not operation under BoG – God helps us all.
We should also not lose sight of the fact that the Tax payers money that was spent and still in the process by the Central Bank and the Ministry of Finance in sanitizing the Banking sector would not take less than 5 years to repay or recover although it was termed as a loan to the beneficiary banks or entities. Therefore depositors in this scenario should kiss their moneys good bye should all things be equal. There is a good saying that says “Prepare for the worse while you hope for the best”
“The truth” research department has also discovered that it may only be 20 Banks that would emerge as the new Banks that would be able to meet the standard requirements of the Central Bank of Ghana by the end of the stated deadline.
But for the benefit of doubt, let’s assume that 25 Banks may come up as the licensed bank, With this assumptions in mind, combining the total accumulated reserve Funds that may be in the coffers of the Central Bank on behalf of the Banking industry would be about GHC 10 Billion ($2 Billion) which is a drop in the ocean considering the size of deficits already existing in the industry. If this be the total reserve of the only deposit taking institutions (10 Billion) and for people to lose over GHC37Billion of unsecured investment, then what is become the fate of this country
These are facts that points out that come 2019, the economy of Ghana would be hanging and hoping on one leg. Therefore the agenda of Ghana beyond aid may just be a folk tale considering the sharp contradictions in the mobilization target of the Ministry of finance in the year 2017 cum 2018 as well as the NPP government flagship program of the free SHS. Probably euro or foreign bonds may be the way out, since millions of the ordinary Ghanaian have already lost so much of their life earnings. This may also force T-Bill rates up and inflations rate and all the other rates may be thrown out of gear. Ghanaians brace yourself up.
We are not creating the impression that it is out of incompetency of the NPP finance minister that has led to this or would be putting the country in the mess from now to 2019 and we equally know that some members of the Past Mahama Lead NDC government would equally be singing un-composed songs with this publication-How pathetic they would be if they do so.
Give praise and credit to where it is due, we believe that the current leaders of the financial ship of the country are doing their very best in cleaning the mess created by past leaders who for whatever reason deepened the woes of the poor citizens’ without enforcing the laws of the land, not even in single bit but rather got it worse year by year, government by government and leadership to leadership.ie this fixed deposit thing by this fund managers dated way back 2006 there about-stands to be corrected though.
We are not here to destroy any ones business as others terms it but rather to alert the public of the impending dangers that they have already putting their heads into in the quest for quick money and higher interest earning ventures. We have written to SEC with BoG in copy but had no reply nor acknowledgement of receipt to the letter or mail even with a follow up. If we have not received a reply, how much less the individual who do not even know how to lodge a complaint via their website. Funny but not funny, do you know that about 72% of Ghanaian do business or deposits their funds with institution without knowing what those institutions core mandates are talk less of knowing who regulates them and where to file a complaint in case of any untoward events?
To be honest, Ghana has been where it is today due to the total negligence and inbreed of corruption and greed among some officials paid with the tax payer’s money to oversee and ensure sanity in the country via the regulatory institutions.
The over politicization and the games of vote manipulation coupled with hunger and quest of power by all means and cost is what is plunging this country into the state in which it is. Where leaders and appointed official are there as rubber stamps or toothless bull dogs just to do the biddings of their political masters in quest for winning next elections but not with a microscopic eye and lens of fixing the country’s basic needs.
The Truth Afric.